Handling Money Transfers in PortfolioCenter

Q.  My broker is Fidelity.  They download all money transactions to the generic cash account and then sweep the dollar amount into the appropriate money market fund with a money transfer later on.  Should I post these transfers?

A. The short answer is yes —  unless you choose an alternate method.  Handling cash with sweeps has pros and cons in PortfolioCenter.

The Situation

[pullquote align=”right”]Handling cash with sweeps has pros and cons in PortfolioCenter.[/pullquote]

Both Fidelity and Ameritrade download cash transactions (deposits, withdrawals, dividends paid to cash, expenses, etc) to a generic money fund symbol (usually CASH).  The next day they download a money transfer transaction which moves the net dollar amount of the previous day’s trades from CASH to the account’s money market fund (for example, FDRXX).  This method creates two money balances in the PortfolioCenter account and the money transfers are treated as internal cash movement for performance.

Here are the pros and cons of the cash/sweep method:

  • PRO: The cash values in PortfolioCenter match the broker.  If money not yet swept out of cash is kept on hold, you can see in PortfolioCenter which funds are available for use and which aren’t.
  • PRO: No manual intervention required.
  • CON:  These sweep transactions multiply the size of the database.  Depending on the size of your firm, the number of accounts, and how many years you’ve been using PortfolioCenter, this may be a big issue.
  • CON:  In my experience, both Fidelity and TD Amertirade tend to make mistakes in these sweep transactions, leaving mistaken negative balances which must be manually corrected.
  • CON:  If you use the Asset Class Summary report and have a “Cash & Equivalents” asset class, these sweep transactions greatly clutter the report, confusing the client and making the report almost useless.

What else can you do?

Edit the generic CASH account to give it a more appropriate name (for example, “Money Market Fund”).   Make CASH your default money market for all accounts.  Then combine your various existing money market symbols with this fund. (Do NOT combine NONE.)  Money Transfers will now appear as a transfer from CASH to CASH.  Block these transfers without posting.

  • PRO: Your reports will be less cluttered  — especially the Asset Class Performance Summary.
  • PRO: Your database will be “lean and mean”.
  • PRO:  Your accounts will only have one cash balance.
  • PRO:  You won’t have to resolve any sweep errors.
  • CON: Manual intervention required.  (Blocking the unwanted sweep transactions).
  • CON: You won’t know the exact name of the money market fund chosen.
  • CON: You must go online to your broker to see available cash.  (However, you might want to do this anyway as PortfolioCenter is always at least 1 day behind.)

How to decide?

  • If database size is not an issue and/or the internals transfers are not a problem on the reports you’ve chosen, go ahead and use the cash/sweep method.
  • If you don’t like the affect of the cash/sweeps on your reports and/or database size is becoming an issue, go with the combine/block method.
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